Friday, 27 February 2015

FOLLOWING her failure to win a reprieve in the High Court, artistic agent Dolores Lavin has declared bankruptcy in a move unlikely to satisfy ex-bestie Paola Toppi, who has a court judgment and bankruptcy notice ordering that Lavin pay Toppi and her husband Neil Cunningham more than $870,000.

Documents obtained by SiN show Lavin was registered as a bankrupt on the national personal insolvency index on February 19, 2015, a week after the High Court shut the last door on her fight to avoid recovery proceedings Toppi of Machiavelli Ristorante fame commenced in 2011.

Worrells' Aaron Lucan has consented to act as trustee of Lavin's bankrupt estate but given the dealings that have taken place regarding the proprietorship of Lavin's ritzy Wylde Street apartment in Potts Point, it promises to be anything but boring.

On September 13, 2013 a Deed of Change of Trustee was registered. Listed on the deed of change are Lavin, accountant Constantine Savell, Billy Buckle Pty Ltd and The Wylde Family Trust. Effectively the deed empowers Savell as appointor of the trust to appoint Billy Buckle Pty Ltd, replacing Lavin as trustee of the The Wylde Family Trust.

Friday, 13 February 2015

Andrew Wily, happier without the stress
of working on profitless bankruptcies at the behest
of AFSA. Photo: Andrew Wily

ARMSTRONG Wily principal Andrew Wily has confirmed he has surrendered his registration as a trustee in bankruptcy, blaming onerous regulation and meagre profits.

"It's been brewing for a while," Wily told SiN when asked when he decided to give up his ticket. "It's a process that will go on for months of winding down, that's all," he said.

The Australian Financial Security Authority (AFSA), which regulates personal insolvency, refused to comment when contacted. Wily's name and contact details were still present on the AFSA website's lists of registered bankruptcy trustees at time of writing, despite Wily confirming he could no longer accept appointments.

"The story with bankruptcy these days is that it's very regulated and the regulator wants everybody to do a lot of work in matters that have no money in them," Wily told SiN. "They're saying 'we don't really care if there's any money in the job or not. You have to do a whole heap of work'.

"So that means you have to employ a lot of staff, and do a whole lot of work and there's no assets in them. It's a commercial decision as to how much work you do. I think I had over 300 files at one stage," he said.

Wily denied that AFSA had pressured him to relinquish his ticket in the wake of an application late last year in the Federal Court by the liquidators of Timbercorp Finance.In November 2014 Mark Korda and Leanne Chesser of Korda Mentha sought an inquiry into Wily's conduct and his removal as trustee of the bankrupt estate of Melbourne-based financial advisor Peter Raymond Holt, who was banned from providing financial services for three years in September 2012 in relation to Timbercorp investments made by his clients. Wily said the application caught him by surprise because he had earlier approached the liquidators, seeking funding to carry out further investigations. He said he also provided lawyers for the liquidators with full access to his case files.

"No, there were no issues on that one but there's no doubt that AFSA's looking at all trustees at the moment," he said. "They're saying, 'guys you've got to keep the high levels of work up and if you don't you've got to start thinking about exiting the industry'," Wily said.

When asked if AFSA had tapped him on the shoulder in relation to an appointment other than Timbercorp Wily was equivocal, saying only that he had an enormous amount of work in progress built up over the years. That work will pass to the Official Receiver who will then allocate it to eligible private trustees.Wily meantime will focus on corporate insolvency work, when he's not fishing and ridding properties of feral pests.

Thursday, 12 February 2015

Paola Toppi, co-owner of the popular Machiavelli restaurant on Clarence Street, has resurrected bankruptcy proceedings against her former friend and business partner Dolores Lavin after the High Court yesterday threw out Lavin's application to have an earlier decision of the Supreme Court overturned.

As of today Lavin has 13 days to comply with a demand she pay Toppi and her husband Neil Cunningham up to $1.2 million. It's almost 10 years since the pair began borrowing millions of dollars from NAB to start and fund their Luxe Studios photographic business.

By 2009 the relationship had soured. Accusations of gambling debts emerged. Toppi was locked out of the Luxe premises on Liverpool Street Darlinghurst. She retaliated, installing receivers in January, 2010. They sold off the Liverpool Street property in June of that year for $4.9 million. NAB then commenced recovery proceedings against all three and their related entities, seeking an additional $4.25 million.

Toppi and Cunningham eventually made good their $2.9 million share of their obligation as co-sureties to NAB by selling their home, although they wore a $1 million haircut on the sale because an earlier offer of $5.6 million had to be declined because at the time the offer was made, the Liverpool Street property had not sold.

Lavin meanwhile had made her own settlement with NAB, paying out $1.35 million and negotiating a deed of settlement that included a covenant from the bank that it would not sue her in relation to the matter. Toppi and Cunningham reasoned that Lavin, as a co-surety to the loans from the beginning, appeared to have extricated herself for a lot less than it had cost them. They initiated proceedings to recover around $800,000. Lavin for that matter launched action to recover $400,000 in excess interest she said accrued because of Toppi's decision to appoint receivers.

Ultimately Toppi and Cunningham's action led to a judgment debt and the issuing of a bankruptcy notice against Lavin in 2013. There have been multiple stays but yesterday's High Court ruling is the end of the line for Lavin in terms of avenues of appeal. The clock is ticking. A creditor's petition hearing must be considered imminent unless Lavin can engineer an alternative.

Toppi and Cunningham were represented by Beazley Singleton Lawyers whilst Lavin was represented by Websters Lawyers.

Tuesday, 3 February 2015

Following the inquiry into the performance of ASIC, the Senate Economics Reference Committee released its report in June 2014. Among other things the committee recommended that government instigate a review of current insolvency laws.

Recommendation 61 of the Senate report called for the review to look at the potential for incorporating elements of America's Chapter 11 bankruptcy reorganisation provisions down under.

The government's new assistant treasurer Josh Frydenberg told SiN through a spokesman this week that those recommendations will be incorporated into the government's overall response to the findings of the Murray Financial System Inquiry, which is currently subject to a period of consultation with submissions closing on March 31, 2015.

Regardless of when we learn what recommendations have been accepted, talk of applying America's Chapter 11 reconstruction provisions to Australia's insolvency regime is recurrent and will likely persist as long as flaws in the existing legislation periodically throw up problematic outcomes.

Every shockingly expensive insolvency that seems to provide no return for creditors whilst compensating appointees handsomely provides Chapter 11's proponents with another justification for calls to embrace the American way which, in the end, largely sidelines insolvency practitioners and puts lawyers in the box seat.

In the interests of sustaining debate around significant areas of insolvency reform, SiN presents the following piece by New York-based bankruptcy attorney Daniel A. Lowenthal, reprinted with permission from the October 2014 issue of the Journal of Corporate Renewal, published by the Turnaround Management Association.

Monday, 2 February 2015

ESTABLISHED telco services outfit Bytecan has appointed Steve Nicols of Nicols + Brien as voluntary administrator (VA) of the company, putting the immediate future of around 120 staff potentially in doubt.

SiN has learned that the company was until recently quite profitable and that a number of clients and other players in the telco and communications services space are examining various assets. Majority owned by interests associated with Wayne and Lea Kitchener of Como in Sydney's south, Bytecan was established in 1990. A first meeting of creditors is to be held in Sydney on Friday, February 6, 2015.

Boasting revenue of about $20 million per annum, Bytecan apparently owes around $1.6 million to the Australian Tax Office (ATO). The company provides maintenance, testing and other technical communications services and expertise to telcos and has worked with all the majors. Another victim of the NBN perhaps?